Bharatmala will lower Logistics costs to 6% from 18% now: Nitin Gadkari

Posted by Daily Shipping Times on 27-10-2017        Tweet

NEW DELHI: Roads built under India’s ambitious Bharatmala programme will increase vehicle travelling speed by around 20-25%, thereby helping reduce logistics costs, Union Minister Shri Nitin Gadkari said in the capital recently.

This in turn would help reduce India’s supply chain cost to 6% from the present levels of 18%, said Gadkari, who heads the Ministry for Road Transport, Highways and Shipping, and Water Resources, River Development and Ganga Rejuvenation.

India has been grappling with high logistics costs of 16-18%, which make its exports uncompetitive vis-à-vis China, which has lower logistics costs of 8-10%.

The Union cabinet recently approved an outlay of Rs6.92 trillion for building an 83,677 km road network over the next five years. The road construction push includes the Bharatmala Pariyojana with a Rs 5.35 trillion investment to construct 34,800 km of roads. In addition, Rs1.57 trillion will be spent on the construction of 48,877 km of roads by the state-run National Highway Authority of India (NHAI) and the Ministry of Road Transport and Highways.

“Bharatmala will bring down logistics cost, impacting exports and investment,” Gadkari said.

“Bharatmala Pariyojana will change the destiny of Country, is the biggest-ever infra scheme in its history,” Gadkari said.

Gadkari said that the planned road construction will result in 80% of India’s vehicular traffic being carried by the national highway network.

India’s 100,000 km of national highways, which constitute just 2% of total road network in the Country bearing 40% of the traffic.

Analysts have lauded the move.

“The latest announcement provides a positive push to the infrastructure segment in the economy. Mobilizing large quantum of funds required, especially from the private sector, would be vital for the successful implementation of these projects,” Care Ratings wrote in a note.

To fund the Bharatmala scheme, Rs2.09 trillion will be raised as debt from the market, while Rs1.06 trillion in private investments is being targeted through public private partnerships. In addition, Rs2.19 trillion will be provided from Central Road Fund (CRF), Toll-Operate-Maintain-Transfer (TOT) projects and toll collections of NHAI.

A total of around 24,800 kms are being considered in Phase I of Bharatmala. In addition, Bharatmala Pariyojana phase –I also includes 10,000 kms of balance road works under NHDP, taking the total to 34,800 kms at an estimated cost of Rs.5,35,000 crore. Bharatmala Phase I – is to be implemented over a five years period of i.e. 2017-18 to 2021-22. Components of Phase I and estimated expenditure are as follows :

Bharatmala envisages improving the efficiency of the National Corridor (Golden-Quadrilateral and NS-EW corridor) by decongesting its choke points through lane expansion, construction of ring roads, bypasses/ elevated corridors and logistics parks at identified points. Around 5,000 kms of the National Corridor will be taken up in Phase-I of Bharatmala at an estimated cost of Rs 100,000 crore.

The programme has identified around 26,200 km of Economic Corridors or routes that have heavy freight traffic,  of which 9,000 kms are being taken up for development in Phase-I at an estimated cost of Rs 1,20,000 crore. It is planned to develop these corridors end to end to ensure seamless and speedy travel and uniformity in standards. Besides this, around 8,000 km of Inter-Corridors and around 7,500 km of Feeder Corridors have also been identified under Bharatmala, of which around 6000 km will be developed in Phase I at an estimated cost of Rs 80,000 crore.    Stretches of roads connecting more than 2 corridors are classified as Inter-Corridors routes, while other routes connecting to 1 or 2 corridors are termed as Feeder Corridors.

These corridors will be developed so as to address the infrastructure asymmetry that exists at many places .